Theranos dealt severe blow by CMS

PALO ALTO, Calif. — Less than one month following Walgreens decision to terminate its relationship with Theranos, the blood-testing lab on Thursday announced that the Centers for Medicare & Medicaid Services has revoked the company's CLIA certificate, among other sanctions. The revocation of Theranos' CLIA certificate precludes the owners and operators of Theranos from owning, operating or directing a lab until at least July 2018.

“We accept full responsibility for the issues at our laboratory in Newark, Calif., and have already worked to undertake comprehensive remedial actions," stated Elizabeth Holmes, CEO Theranos. "Those actions include shutting down and subsequently rebuilding the Newark lab from the ground up, rebuilding quality systems, adding highly experienced leadership, personnel and experts, and implementing enhanced quality and training procedures,” she said. “While we are disappointed by CMS’ decision, we take these matters very seriously and are committed to fully resolving all outstanding issues with CMS and to demonstrating our dedication to the highest standards of quality and compliance.”

In addition to the revocation of Theranos' CLIA certificate, the full list of CMS sanctions include:

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  Limitation of the laboratory’s CLIA certificate for the specialty of hematology;


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  A civil money penalty;


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  A directed portion of a plan of correction;


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  Suspension of the laboratory’s approval to receive Medicare and Medicaid payments for any services performed for the specialty of hematology; and


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  Cancellation of the laboratory’s approval to receive Medicare and Medicaid payments for all laboratory services.

While the revocation would not take effect for 60 days, the company will not conduct any patient testing in the Newark lab until further notice, Theranos announced. During this period, the company will continue to work with CMS to resolve and remediate outstanding issues in the Newark lab, and will continue to provide services to its customers through its Arizona lab, Theranos stated.

Walgreens last month ended its relationship with Theranos. “In light of the voiding of a number of test results, and as the Centers for Medicare and Medicaid Services has rejected Theranos’ plan of correction and considers sanctions, we have carefully considered our relationship with Theranos and believe it is in our customers’ best interests to terminate our partnership,” stated Brad Fluegel, Walgreens SVP and chief health care commercial market development officer, at the time of the decision.